Malaysia's Najib to announce steps to help ethnic Malays

KUALA LUMPUR (Reuters) - Malaysian Prime Minister Najib Razak will announce measures this weekend to boost the economic role of majority ethnic Malays, signaling a reversal of earlier pledges to roll back race-based policies that have stunted the country's competitiveness.

The announcement, due on Saturday, comes as Najib faces a possible ruling party leadership contest next month. It also follows an election in May in which his coalition, in power since independence from Britain in 1957, was overwhelmingly rejected by minority ethnic Chinese voters.

"I will soon announce a comprehensive policy to encourage Bumiputera participation in the economy," Najib said on his official Twitter page on Wednesday.

The initiatives will cover equity ownership, business, "human capital" and social and economic development, the state-controlled New Straits Times cited senior officials as saying. He will also announce steps, the report said, to strengthen state institutions that promote the economic role of Malays, also known as Bumiputeras, or "sons of the soil".

Abdul Wahid Omar, a minister in the Prime Minister's Department, was quoted as saying there could also be steps to create more opportunities for Malays in the private sector and to boost their ownership of commercial property.

"A recurring issue is the lack of employment opportunities for Bumiputeras in the private sector, especially at the executive level," he said.

Affirmative action privileges were put in place in the early 1970s to improve the lot of Malays, who make up around 60 percent of the 28 million population, are historically poorer and traditionally live in rural areas.

Minority ethnic Chinese, about a quarter of the population, are wealthier and still dominate business and the economy.

After he took the country's top job in 2009, Najib cast himself as a modernizer who would roll back the privileges that have deterred investment and alienated minority Chinese and ethnic Indians. He has also pledged to base government assistance more strongly on needs than on race.

But those plans have largely failed to advance due to stiff resistance from within the ruling, ethnic Malay United Malays National Organization (UMNO).

Najib was further weakened by May's election, in which the ruling coalition lost the popular vote and saw its parliamentary majority shrink.

The result, contested by the opposition, exposed a deepening divide between Malays and ethnic Chinese and was seen as leaving Najib more dependent on support from UMNO traditionalists, such as influential former prime minister Mahathir Mohamad.

For four decades, ethnic Malays have benefitted from race-based policies ranging from quotas for university admissions to preferential entry to the civil service and guaranteed minimum levels of equity ownership.

The government has a long-standing goal of increasing the Bumiputera share of equity wealth to 30 percent, from the most recent official figure of 23 percent.

Critics say the policy has mostly benefitted wealthy, well-connected Malays more than the poor majority, while also contributing to a massive "brain drain" of ethnic Chinese who leave Malaysia for opportunities elsewhere.